Tech Titans Drive Market Sentiment: SP500 Futures Hold Steady Amid Big Tech Earnings, While In

In the midst of an eventful trading session, S&P 500 futures are showing minimal movement as investors carefully assess the latest earnings reports from major technology companies. With mega-cap tech stocks like Google-parent Alphabet experiencing substantial gains and Microsoft facing declines, the market is on high alert. 

However, the primary focus remains on the upcoming Federal Reserve interest rate policy decision, with Chair Jerome Powell's press conference slated for later today. As Wall Street awaits crucial clues about the future policy path, join us for live updates on how these factors are shaping the market landscape.

S&P 500 Futures Steady Amid Tech Earnings and Fed Decision Anticipation

In the trading session on Tuesday night, futures linked to the S&P 500 showed little change as investors analyzed corporate earnings from major technology companies ahead of the upcoming interest rate policy decision on Wednesday.

While S&P 500 futures remained relatively stable, Nasdaq 100 futures declined by 0.2%. Futures tied to the Dow Jones Industrial Average also slipped by 26 points, representing a decrease of 0.07%.

A spokesperson for Invezz.com said tech giants, known as mega-cap tech stocks, experienced significant movement in after-hours trading following their earnings reports. Google-parent Alphabet saw a rise of more than 6% as strong cloud revenue growth contributed to better-than-expected results. In contrast, Microsoft experienced a slide of more than 3% after reporting a slowdown in cloud revenue growth.

Beyond the tech sector, Snap faced a significant decline of 19% in after-hours trading due to weak guidance for its current-quarter performance.

Investors were eagerly looking forward to the Federal Reserve's forthcoming interest rate policy decision and the subsequent press conference headed by Chair Jerome Powell, both slated for Wednesday afternoon. The market has priced in a 98% probability of the central bank raising interest rates, marking the return to rate hikes after the decision not to increase rates at the June meeting.

According to Bill Northey, the senior investment director at U.S. Bank Wealth Management, investors are expected to closely pay attention to the post-meeting press conference for any indications regarding the future policy direction. Any indication from Chair Powell that more restrictive policies may be needed to control inflation could potentially dampen recent stock market optimism.

On Tuesday, Wall Street experienced a positive day as investors reviewed the latest earnings and prepared for the Fed's decision. The Dow secured its 12th-straight winning session, a streak not seen since February 2017, with a gain just shy of 0.1%. The S&P 500 and Nasdaq Composite both experienced gains, closing approximately 0.3% and 0.6% higher, respectively.

As Wednesday approaches, investors will remain vigilant, keeping a close eye on the latest corporate financial releases. Notable corporations like Coca-Cola, Stellantis, Boeing, and AT&T are anticipated to announce their earnings before the market opens, while Meta, Chipotle, and Mattel have their earnings releases scheduled for after the market closes.

FED: Negative Pressure to Stocks or Not?

The Federal Reserve (FED) plays a critical role in influencing companies' stocks and the overall financial market. As the central banking system of the United States, the FED wields significant power over monetary policy, including decisions on interest rates and money supply. These policy moves have a direct impact on businesses and their stocks.

The decisions made by the Federal Reserve regarding interest rates hold significant sway in the financial landscape. Notably, when the FED opts to lower interest rates, it results in reduced borrowing costs for businesses. This affordability of borrowing empowers companies to invest, expand their operations, and potentially enhance their profitability. Lower interest rates also make equities more attractive to investors compared to other assets, driving up demand for stocks, which can lead to stock price appreciation.

Conversely, in the event that the Federal Reserve chooses to raise interest rates, it results in increased borrowing costs, placing additional financial burden on businesses seeking to borrow funds. This scenario can place pressure on companies and potentially impact their financial operations. This could lead to reduced investment, slower growth, and potentially lower stock prices, as investors might seek other investment options with higher yields.

In times of uncertainty or economic challenges, the FED's actions can provide much-needed stability. For example, during the 2008 financial crisis, the FED implemented aggressive monetary policies, including quantitative easing and near-zero interest rates, to support the economy and boost investor confidence. These measures helped alleviate market turmoil and aided in the recovery process.

However, there can also be debate over the FED's influence, with critics questioning the potential distortion of market forces and the creation of asset bubbles. Some argue that the FED's interventions may delay necessary market corrections and artificially inflate asset prices.

Overall, while the FED's influence on companies' stocks can be a valuable tool for economic stability and growth, it is not without its challenges and criticisms. Striking a balance between supporting economic expansion and avoiding market distortions remains a delicate and ongoing task for the FED.